While your financial well-being may have a certain level of dependance on your income, a greater determination of how well-off you are financially is determined by your financial decisions.
Below are the top 5 financial decisions you can make that will make you feel good about your money.
#1 – Work Before Play
The concept of “work before play” is a fundamental attribute for living a good, minimally stressed out life. What this means is, indulging yourself in life’s luxury’s should be a reward to yourself that you have earned form your work. If you don’t have the money for those brand-name jeans, those fancy dinners and nights out, or that daily latte, don’t use a credit card and pretend that you can afford it. Spending money you don’t have is a certain path to a life of debt; doomed to play catch up for the rest of your life.
Wait until you have saved enough cash to pay for these luxuries, and you will find yourself feeling financially secure.
#2 – Don’t Buy a Brand New Car
Buying a brand new car is not only a bad investment, it is not an investment at all. An investment is something that provides the opportunity to make your money grow. So unless your planning on holding on this car for the next 50 years untill it becomes an antique, it is strictly an expense.
It is said that a brand new car loses 10% of its value the second it is driven off the lot, and after 2 years it loses about 30%. A car’s greatest depreciation occurs the first 2 years, and a 2 year old car is generally still in good condition to last you several more years, making it the optimal time to get the best bang for your buck.
#3 – Wait to Buy a Home
Once you buy a home, you’re obligated to pay a mortgage for the next 30 years. If you have no emegency fund or other assets you can turn to for cash, you have made yourself more susceptible to life’s misfortunes. If the economy takes a turn for the worst and you’re laid off, you are now stuck with a mortgage with no means to pay it, putting you’re credit and your financial well-being at risk.
Don’t rush to get a home. Build a savings and other investments first.
#4 – Don’t Refinance for Spending Cash
For those that own a home, you may want to re-consider that refinance. Unless your pulling cash out of your home to re-invest it, refinancing to turn the equity in your home into spending cash is putting years of hard work to waste. You have built up a nice safety net that you can turn to when things get difficult financially, and pulling out the cash to spend on luxuries is an un-wise financial decision.
#5 – Have an Emergency Fund
This is a no-brainer for financial security. You must have a savings account that you can turn to when mis-haps occur such as when your car breaks down, you get injured or sick, or your laid off from your job. Having an emergency fund also provides the added benefit of allowing you to have peace of mind.